Illustration by Lanette\u00a0Behiry\/Adobe\u00a0Stock<\/p>\n
Rates fell after Trump directed GSEs to buy mortgage-backed securities. Will it be enough to energize a market that ended 2025 with no gain in sales over 2024?<\/p>\n
Key points:The 30-year fixed-rate mortgage averaged 6.06% this week, the lowest level in more than three years and nearly a point below last year\u2019s average for the same week.Mortgage applications jumped 28.5%, led by refinance requests, but \u201cany recovery in home sales is likely to be gradual rather than rapid,\u201d a Realtor.com economist noted.While slowly improving, affordability remains an issue, and inventory has been shrinking.<\/p>\n
President Donald Trump’s Jan. 8 announcement that Fannie Mae and Freddie Mac would buy $200 billion in mortgage-backed securities<\/a> appeared to energize the housing market \u2014 at least for a week \u2014 during the slowest time of the year.<\/p>\n The 30-year fixed-rate mortgage averaged 6.06% this week, down from 6.16% the week before, according to Freddie Mac<\/a>. That’s the lowest level for that survey in more than three years and nearly a full percentage point below the 7.04% average reported during the same period a year ago<\/a>.<\/p>\n Mortgage applications surge, but spring sales might not<\/p>\n Falling rates spurred an increase in mortgage applications, with overall activity for the week ending Jan. 9 up 28.5% compared to the week before, according to the Mortgage Bankers Association<\/a>. Much of that surge came on the refinance side, which jumped 40% from the previous week and was 128% higher compared to the same week a year ago.<\/p>\n Home purchase applications also got a significant boost, rising 16% week-over-week.<\/p>\n What remains to be seen is whether this was a one-time increase or an indication of renewed housing market momentum \u2014 and a better spring homebuying season compared to recent years.\u00a0<\/p>\n If mortgage rates stay within the low-6% range this year, that could lead to a modest improvement in home sales in 2026, according to Hannah Jones, senior economic research analyst for Realtor.com.<\/p>\n “Even so, affordability constraints and the remaining stock of low-rate mortgages suggest any recovery in home sales is likely to be gradual rather than rapid,” Jones said.<\/p>\n Affordability improving, but buyers ‘still think prices are too high’<\/p>\n The median monthly housing payment was $2,413 for the four weeks ending Jan. 11, according to Redfin<\/a> \u2014 the lowest level in two years and down 5.5% from a year ago \u2014 but affordability will need to improve more significantly<\/a> before it returns to pre-pandemic levels.<\/p>\n While it’s unclear if Trump’s mortgage-backed securities plan will ultimately boost home purchases, pending sales were sluggish before his announcement. Redfin reported that pending sales fell 5.9% between November and December, dropping to the lowest seasonally adjusted level on record (with the exception of April 2020, when pandemic lockdowns were in effect).<\/p>\n “Buyers are extremely selective and still think prices are too high<\/a>,” said Alison Williams, a Redfin Premier real estate agent in Sacramento.\u00a0<\/p>\n “There aren’t a ton of homes on the market, but there are enough for house hunters to feel like they can take their time. One challenge is that many buyers’ purchases are contingent on the sale of their current property, and many sellers aren’t willing to take contingent offers,” Williams added. “This has caused a standstill in the market<\/a>.”<\/p>\n Existing sales rose in December, but remained flat for the year <\/p>\n While pending sales slowed at the end of 2025, existing sales perked up<\/a>, according to the National Association of Realtors. The pace of homes sold in December was 1.4% higher compared to a year ago and up 5.1% from November.<\/p>\n